Warren Buffett says it's time to buy US shares

Warren Buffett has dismissed the volatility in world markets and the bearish outlook for the global economy to begin investing in US equities in what is a highly contrary move from one of the world's most successful investors.

By James Quinn, Wall Street Correspondent

6:19PM BST 17 Oct 2008

Mr Buffett – known as the "Sage of Omaha" for his ability to pick the right time to invest in situations – admitted that he has begun to use some of his $62bn fortune to invest in the shares of American companies.

Warren Buffett has said it's time to buy US shares

Although the septuagenarian chairman of insurance conglomerate Berkshire Hathaway believes that the economic outlook remains dire, his recent buying spree could be read by some as a signal to begin buying equities again.

His views – in a self-penned commentary in the New York Times – could have a similar impact to those he made in 1974, during an interview in Forbes magazine, when he made a very stark public prediction, calling the bottom of the bear market.

Asked how he felt, Mr Buffett famously then replied: "Like an oversexed guy in a whorehouse. Now is the time to invest and get rich."

In his latest musings, however, he does not attempt to call a market bottom, and freely admits that he does not know in which direction the markets are headed in the short-term.

"The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher," he writes in the New York Times piece. "In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary."

"So ... I've been buying American stocks," he continues, noting that his personal account – which does not include his Berkshire Hathaway holdings, which are all committed to philanthropy – will soon be 100pc invested in US equities, when previously it had held nothing but US treasuries.

Mr Buffett said the reason for his apparent volte-face is simple: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."

Despite his advanced years – he turned 78 at the end of August – Buffett remains convinced that the companies in which he is investing – details of which he chose to omit from the article – will be setting "new profit records, five, 10 and 20 years from now".

His record for picking winners is well documented, and Berkshire has averaged an annual return to shareholders of more than of 21pc for each of the last 42 years.

Recent bets by Mr Buffett in the stock market have also looked shrewd, not least his decision to plough up to $10bn of Berkshire's money into Goldman Sachs' preferred stock, for which his company will receive a healthy dividend payment and very little downside.